Response to the following problem:
Office equipment was purchased at a cost of $3,400. It has an expected useful life of six years, and after it has been fully depreciated, it will have a scrap value of $400.
Determine:
1. How much of the asset is subject to depreciation?
2, What will be the annual depreciation recognized?
3. Assuming that the asset was acquired at the beginning of the year, record the adjusting entry to recognize depreciation for the first full year;
4. Determine the book value of the asset after the first year's adjusting entry.
S. What is the book value or the asset after it has been depreciated for six years?
6. What happens to the book value of the asset during each year of its useful life? Why?
7. When recording annual depreciation. why doesn't the accountant credit the asset account directly?